I'm not surprised her diploma was held; it was the only form of power the administration had left. That said, their reasons were childish and inane. An apology? Unless her words were offensive (and I doubt it), she should not be denied her diploma for taking advantage of a chance to communicate.
I hope she doesn't back down. Obviously she felt stongly enough to make the speech in the first place; now is the time to follow through.
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If ignorance is bliss, you must be having an orgasm.
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